U.S. IPO Weekly Recap: Big Biotechs Score Big As Adaptive Soars 142%

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Includes: ADPT, AFYA, AMK, BBIO, CHNG, CMBM, CSTL, FLWR, HCAT, IHRT, KRTX, LINX, LVGO, MORF, NOVA, OLB, PRMI, REAL, WIMI
by: Renaissance Capital IPO Research
Summary

Eight companies raised $2.1 billion this past week, capping off the US IPO market's largest quarter in five years.

The week was split between tech and biotechs, including two in the biotech space that went public at valuations of more than $2.0 billion.

Newly-formed office REIT Priam Properties postponed its planned $171 million IPO. Radio giant iHeartMedia withdrew its S-1, instead planning to complete a direct listing in July.

Eight companies raised $2.1 billion this past week, capping off the US IPO market's largest quarter in five years. The week was split between tech and biotechs, including two in the biotech space that went public at valuations of more than $2.0 billion. Over 10 companies submitted initial filings, promising an active July.

This week, we also released our 2Q 2019 US Quarterly Review. 62 companies went public during the quarter and raised $25 billion, a four-year high by deal count and a five-year high by proceeds.

8 IPOs and 1 SPAC During the Week of June 24th, 2019

Issuer
Business

Deal
Size

Market Cap
at IPO

Price vs.
Midpoint

First Day
Return

Return
at 06/28

Adaptive Biotechnologies (NASDAQ:ADPT)

$300M

$2,696M

25%

+102%

+142%

Provides genetic immunosequencing tests used to diagnose and treat diseases.

BridgeBio Pharma (NASDAQ:BBIO)

$349M

$2,048M

13%

+62%

+59%

Late-stage biotech developing therapies for genetic diseases and cancers.

The RealReal (NASDAQ:REAL)

$300M

$1,819M

11%

+45%

+45%

Authenticated online luxury consignment store.

Morphic Holding (NASDAQ:MORF)

$90M

$465M

0%

+20%

+32%

Preclinical biotech developing oral integrin inhibitors for chronic diseases.

Karuna Therapeutics (NASDAQ:KRTX)

$89M

$396M

0%

+25%

+25%

Phase 2 biotech developing therapies for schizophrenia and other CNS disorders.

Change Healthcare (NASDAQ:CHNG)

$557M

$4,076M

-26%

+15%

+12%

Provides healthcare revenue cycle management software and services.

Churchill Capital Corp II (NYSE:CCX.U)

$600M

$750M

0%

+1%

+2%

Second blank check company founded by dealmaker and former Citi executive Michael Klein.

Linx (NYSE:LINX)

$308M

$1,805M

0%

-3%

-3%

Brazilian provider of POS/ERP connectivity software and payment services.

Cambium Networks (NASDAQ:CMBM)

$70M

$311M

-14%

-19%

-20%

Provides wireless broadband networking products.

KKR-backed BridgeBio became the year's largest biotech IPO this week, raising $349 million at a $2.0 billion market cap, and finishing the week up 57%. BridgeBio is developing a large pipeline of candidates for genetic diseases, and last year's spin-off Eidos Therapeutics (NASDAQ:EIDX) has outperformed since its IPO. Adaptive Biotechnologies priced well above its original range and flew up 102% on its first day, the year's second-best pop, and closed Friday even higher with a 142% return from IPO.

Biotechs Morphic and Karuna also traded up, aiming to improve drugs that have showed toxicity issues in the past. Working with immunology pioneer Timothy Springer, Morphic only has preclinical data so far, but its oral integrin candidate could eventually take share in a large market. Karuna is also targeting a large market, psychosis, and is led by an experienced management team.

The RealReal priced up and popped 45% on Friday, continuing a streak of strong returns for fast-growing e-commerce plays (Revolve (NYSE:RVLV), Chewy (NYSE:CHWY)). Led by the founder of infamous dot-com IPO Pets.com, The RealReal is a leader in the emerging online luxury resale market. However, it is currently unprofitable, spending heavily on sales and marketing, as well as authentication.

The week's largest deal, Change Healthcare, priced well below the range to raise $557 million. Spun out of McKesson with backing from Blackstone, the large provider of healthcare billing software and services finished the week with a 12% gain.

Cambium Networks was the week's worst-performer, as the wireless networking products company fell 19% on its first day. While it came public at a discount to peers, investors may have been worried about slowing growth at the end of 2018, and gross margin pressure.

Traded in Brazil, retail payment software company Linx raised $308 million in an upsized global offering that listed it on the NYSE. It is the year's first US offering from a Brazilian company. Trading was muted, which is not surprising for a cross-listing.

Newly-formed office REIT Priam Properties (PRMI) postponed its planned $171 million IPO. Radio giant iHeartMedia (IHRTQ) withdrew its S-1, instead planning to complete a direct listing in July.

12 Filings During the Week of June 24th, 2019

Issuer
Business

Deal
Size

Sector

Lead
Underwriter

China Yunhong Holdings (NASDAQ:ZGYHU)

$50M

SPAC

Maxim

Blank check company targeting consumer or lifestyle assets in Asia.

Livongo (NASDAQ:LVGO)

$100M

Health Care

Morgan Stanley

Provides a unified healthcare platform for chronic illness management.

ProSight (PROS)

$100M

Financials

Goldman

Specialty P&C insurer that operates seven segments of coverage.

Health Catalyst (NASDAQ:HCAT)

$200M

Technology

Goldman

Provides a data analytics platform and services to healthcare organizations.

Sunnova (NYSE:NOVA)

$100M

Utilities

BofA ML

Provides residential solar energy systems and services.

WiMi Hologram (WIMI)

$50M

Technology

Benchmark

Chinese provider of holographic augmented reality ad services and software.

Castle Biosciences (NASDAQ:CSTL)

$58M

Health Care

Leerink

Sells genetic tests used to diagnose skin cancers.

Orisun Acquisition (NASDAQ:ORSNU)

$40M

SPAC

Chardan

Blank check company led by an experienced Chinese investor targeting a high-tech business in the US.

The OLB Group (OLB)

$15M

Technology

ThinkEquity

Merchant acquirer with a suite of payment services.

Flowr (FLWR)

$94M

Consumer Discretionary

Barclays

Canadian medical and recreational cannabis producer.

Afya (NASDAQ:AFYA)

$100M

Consumer Discretionary

Morgan Stanley

Brazilian for-profit medical and healthcare education group.

AssetMark Financial (NYSE:AMK)

$100M

Financials

JP Morgan

Provides a wealth management platform for independent financial advisers.

IPO Market Snapshot

The Renaissance IPO Indices are market cap weighted baskets of newly public companies. As of 6/27/19, the Renaissance IPO Index was up 35.6% year-to-date, while the S&P 500 had a gain of 17.9%. Renaissance Capital's IPO ETF (NYSE: IPO) tracks the index, and top ETF holdings include Elanco (NYSE:ELAN) and VICI Properties (OTC:VICI). The Renaissance International IPO Index was up 13.3% year-to-date, while the ACWX was up 13.6%. Renaissance Capital's International IPO ETF (NYSE: IPOS) tracks the index, and top ETF holdings include SoftBank and Xiaomi.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.